Ranking Member Cassidy Applauds Senate Vote to Overturn Biden Rule Threatening American Franchise Model, Local Businesses

WASHINGTON – Today, U.S. Senator Bill Cassidy, M.D. (R-LA), ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released a statement following the U.S. Senate passage of the bipartisan Congressional Review Act (CRA) resolution to overturn the National Labor Relations Board’s (NLRB) joint employer rule, which attempts to bolster unionization efforts at the cost of undermining the foundational viability of the franchise business model. Last November, Cassidy was joined by U.S. Senator Joe Manchin (D-WV) and Republican Leader Mitch McConnell (R-KY) in introducing the CRA resolution. The Senate passed the CRA by a bipartisan vote of 50 to 48. The resolution will now head to the President’s desk.    

“Saddling franchisers with liability for thousands of franchise owners that actually operate the day-to-day activities of small business would be a sure way to destroy the system of franchising. This model has empowered those underrepresented in the business community, such as women and people of color, to become successful small business owners and create jobs for others,” said Dr. Cassidy. “The Biden administration should support workers and increase economic opportunity, not make it easier to forcibly and coercively unionize workers while undermining the business model of the establishments they work for.”    

“In West Virginia, more than 98% of our businesses are small businesses, and they are the heart and soul of our communities,” said Senator Manchin. “The NLRB’s joint employer rule would shut the door for thousands of citizens who want to start a business and fulfill the American Dream when we should be focused on bolstering our economic growth and empowering Main Street America. I’m glad our CRA has now passed both the House and the Senate and I encourage President Biden to accept this bipartisan rejection of his overreaching and irresponsible policy.”

Before the vote on the CRA resolution, Cassidy spoke on the U.S. Senate floor blasting Biden’s joint employer policy. Click here to watch and here to download the full remarks.  

The Biden rule makes franchisers liable for the labor decisions of individual franchise owners despite them not having operational authority over the business’ employees. This new liability threatens the viability of the franchise business model, a system that employs over nine million workers and has empowered Americans from all communities to become successful business owners. Additionally, the rule creates uncertainty among small and local businesses on their legal liabilities, leading to higher operational costs and less opportunity to create jobs. Specifically, franchisors may choose to no longer involve themselves in safety training or setting customer service standards in order to avoid legal liability associated with a franchisee.  

For over 25 years, legal precedent established that a company could only be considered a joint employer if they have “direct and immediate” management over another business’ employees. This changed in 2015 under the Obama administration, which forced companies to be liable for another business’ employees if they held “indirect” and “reserved” management over their workers. In 2020, the Trump administration returned to the longstanding “direct and immediate” standard, providing legal stability to businesses. 

U.S. Representative John James (R-MI) introduced the companion CRA resolution in the U.S. House of Representatives. On January 12, the resolution passed the House by a vote of 206 to 177.     

The CRA to overturn Biden’s joint employer policy is supported by over 170 organizations. 

“On behalf of the 12,000 franchise businesses in Louisiana and first-generation Americans like myself, I am so grateful Sen. Cassidy is standing up for the franchise model. The joint employer rule out of Washington is unconscionable because it would force franchise businesses to take control of their franchisees like me.  My family didn’t emigrate from Guatemala to the U.S. so that we could have the freedoms we fought so hard to earn taken away from us by those that didn’t have to live in their car just to survive, let alone be the business owners we are today. Thank you to Sen. Cassidy for helping to ensure that I can remain an independent business owner,” said Bill DiPaola, a New Orleans restaurant franchisee.   

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